When a Bond Sells at a Premium,it Means That

question 12

Multiple Choice

When a bond sells at a premium,it means that:

• A) The contract rate is above the market rate.
• B) The contract rate is equal to the market rate.
• C) The contract rate is below the market rate.
• D) The bond is secured by corporation assets.
• E) The bond is always callablE.

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Definitions:

Negotiable Instrument

A signed document promising a sum of payment to a specified person or the assignee which is transferable by endorsement.

Sum Certain

A specific, agreed-upon amount of money owed under a contract that is not subject to change.

Unconditional Promise

A commitment or guarantee that is not subject to any conditions or contingencies.

Time Certain

A specific, agreed-upon moment or period in which something is to occur or be completed, often used in contracts and scheduling.